The residential lettings market is an interesting phenomenon. If your landlord happens to be a corporation whose interest is primarily owning the property as an asset and gain revenue from it on the lettings market, you are often faced with perhaps the most outsourced business there is.
I am moving to Bristol, UK in a few weeks. I was lucky enough to find a good flat (at least as far I know at the moment) in the Harbourside area of central Bristol. I found the flat on the internet through one of the property marketing websites. A lettings agent showed me the flat and dealt with the practical matters. The property is owned, I later found out, by an investment company. When I check in to the flat, I will be welcomed by a lady from a company that specializes in inventories and checking tenants into and out of their flats. The property is managed by a property management company based in London.
Everyone, it seems, is concentrating on their ‘core business’. The efficiency gains, I am sure, seem significant. The organization of all this is completely horizontal. Gone are the days when the tenant had to deal with a vertical integrate, the landlord who owned the building, took care of it and the tenants—for better or worse.
The old vertical model poses its own problems, but the situation in which there are layers and layers of ‘service providers’ between the landlord and the tenant can be problematic. For one, nobody really cares about the tenant.
The last time I had the pleasure of dealing with the outsourced property letting/management/ownership model was in Helsinki, Finland. The property was owned by Varma, a major pensions insurance corporation. Varma’s interest in the property, it’s old HQ in Helsinki on Eerikinkatu, was that of ownership. Varma’s business is pensions and, accordingly, it is a conservative investor, focusing on low risk, long term investments. Property in central Helsinki is a safe bet, or at least as safe as they get. Varma had outsourced the management of the property to Aberdeen Property Investors (API), a multinational asset management and investment corporation. API had outsourced the security management of the building to Securitas, another multinational, and site management (cleaning and maintenance et cetera) to Lassila & Tikanoja, a major national maintenance services corporation. Largely the same model, then, to the one I am faced with in Bristol, with the simplification that API also did the letting agent’s job.
The building was lovely, located close both to the centre of Helsinki and the sea. And, it was brand spanking new—or newly converted, which amounted to the same thing. The build quality was top notch, there was a heated secure parking garage in the basement and the flat itself had a sauna as an added bonus. Nothing to complain there, if we ignore the rent.
The practical effects of the layers of outsourcing were some of the admittedly rather few annoyances—which were also provided by our rather eccentric next-door neighbour. How the outsourcing impinged on the quality of life became particularly apparent when we moved in and when we moved out. When we moved in, arriving in a car packed to the hilt with stuff, we were treated to a three act farse that was the check-in. According to the instructions from API, we first had to find a Securitas office on the outskirts of Helsinki to get a key. We did, only to find out that actually the key was in the city centre service desk, some half an hour and non-existent parking space away. After we got the key, we had to drive out to the outskirts of Helsinki again to the Lassila & Tikanoja office where I had to sign a piece of paper, they gave me a stamped one, or something similarly unimportant but very official. The procedure was possible to do only in this order. We were exhausted—and we had not moved in yet.
The lack of on-site maintenance provider, and the rather complete lack of interest from the part of API to do anything to but the minimum to manage the property, produced an unpleasant sidetaste to living in the flat, but thankfully did not manage to ruin the experience. But, upon our departure from the flat, the dark side of outsourcing really came out. The problem, though, was thoroughly with property management company. Once we had told them we were leaving, I soon received a call from the future tenant asking if they could see the flat. Somewhat unorthodox, I though, but agreed on a time when we would be out of the flat to make it possible for them to come and have a look with the management company representative. The real surprise came when the company informed me that I should do the showing. Not only had they broken the personal data protection laws by forwarding my phone number to the new tenant, they expected me to do their job for them. I protested, but to little effect. I began to understand where the efficiency gains of outsourcing came from.
Perhaps my Bristol experience will be different. Considering the rigamarole we were put through when we were checking in to our flat in Helsinki, the idea of having someone to come in and do it for, or rather with, me does not seem so bad. If in the world of sourcing this service is provided by a company that specializes in check-ins, so be it. It is rather interesting to note, however, that I will be charged a rather a hefty sum for the service. And it is not optional. The tenant pays, one way or another.
I cannot but help wonder, though, whether the ‘gains’ made by all the outsourcing are that beneficial. Might there be another way that would pay some (more) attention to the tenant? Or is it the case that since the final customer of the various management agencies is the landlord (or another agency), the needs and interests of the tenant are of no particular interest to anyone? Perhaps the world has changed so much that it has become the same again.
Source:http://pasiahonen.wordpress.com/2010/07/28/the-outsourcing-of-everything-the-case-of-residential-lettings-market/
